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Companies Pay N11.5tn Tax Under Buhari – Report

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The Federal Government has raked in N11.5tn from taxes paid by business organisations under the administration of Muhammadu Buhari (retd), findings have revealed.

Data sourced from Company Income Tax reports published by the National Bureau of Statistics between 2015 and 2022 showed CIT collected by the Federal Inland Revenue Service stood at N1.3tn when the President assumed office in 2015 and dipped by 26 per cent to N1tn in 2016 when the country’s economy went into recession due a significant drop in oil prices.

It maintained an upward trajectory between 2017 and 2020, as the government generated a total of N5.3tn during this period.

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Companies Income Tax is a tax on the profits of incorporated entities in Nigeria. It also includes the tax on the profits of non-resident companies carrying on business in Nigeria. The tax is paid by limited liability companies inclusive of the public limited liability companies. It is commonly referred to as a corporate tax.

The CIT rate is 30 per cent for large companies (i.e. companies with gross turnover greater than NGN 100m), assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).

The Federal Government earned N1.6tn from corporate tax in 2021 and made a record N2tn revenue from CIT in the three quarters of last year.

According to the data, the highest contributors to the CIT were the manufacturing, Information Communication Technology and financial services sectors.

Also a critical evaluation of 2022’s Company Income Tax records showed a significant hike in taxes paid by companies across the board.

For example, tax from firms in the information and communication sector rose by 158.51 per cent from N51.05bn in the third quarter of 2021 to N131.97bn in the corresponding period in 2022.

In the same vein, manufacturers paid the most taxes during the period in review, as the Federal Government increased the number of taxes collectable by the Federal Inland Revenue Services from 39 to 61 items.

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Some of the new taxes as contained in the schedule to the taxes and levies (Approved list for collection) Act (Amendment Order), 2015, include “national information technology development levy, economic development levy, environmental (ecological) fee or levy; inter-state road taxes; mining, milling and quarrying fee; infrastructure maintenance charge; social services contribution tax, and wharf landing fee where applicable.

Others are entertainment tax, produce sales tax, property tax (where applicable); fire service charge; slaughter or abattoir fee, where state finance is involved, etc.”

In the same vein, checks by The PUNCH revealed that CIT paid by manufacturers increased by 52.3 per cent from N91.2bn paid in the third quarter of 2021 to N138.9bn in the corresponding quarter of 2022.

Speaking in an interview with The PUNCH, the President of the Lagos Chamber of Commerce and Industry, Michael Olawale-Cole, said the productive sector was being overburdened by taxes because of the government’s inability to widen the tax bracket and capture more taxpayers.

Olawale-Cole further advised the government to devise means of protecting its sources of revenue rather than resort to aggressive taxation whenever it encounters a revenue shortfall.

He said, “So, the government needs money, but what we are saying is that the government is just putting pressure on the same people as opposed to developing to bring more people into the tax bracket. That is the major issue. There are a lot of people who are not paying taxes but are making money in this country.

“So, the government should find a way of catching them. They are improving because now government banks are linked with tax authorities. So, if income comes into your account, they have a way of knowing. They should do more of that. “This could be done through electronic means.

“We are saying they should not increase the tax rates all the time for the same people who are paying when there are more people who are not paying because if you tax them to a point, they will not be able to pay.”

Industry experts in the ICT sector, which ranks amongst the highest contributors to the CIT, have also raised concerns that the sector was being overburdened by multiple taxes.

A report titled “Taxing Nigeria’s subnational economies to oblivion” by SBM Intelligence recently revealed that the industry suffered from over-taxation because of its sustained growth in the last 20 years.

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It said, “At the federal level, telecommunications companies are expected to pay taxes such as Companies Income Tax, the Capital Gains Tax, Withholding Taxes, Stamp Duty, National Industrial Training Fund, Employees Compensation Scheme, the Tertiary Education Trust Fund, National Housing Fund contributions, Contributory Pension Schemes, and customs duties.

“These taxes are applicable to all incorporated companies in Nigeria. There are also sector-specific taxes and levies such as the Annual Operating Levy paid to the Nigerian Communications Commission by all holders of licences issued by the regulator, the National Cybersecurity Fund, the National Information Technology Development Fund Levy and Right of Way charges.”
PUNCH

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JUST IN: CBN May Increase Bureau De Change’s Share Capital To N2bn

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The Central Bank of Nigeria is considering plans to increase the share capital of Bureau De Change operators to N2bn and N500m for Tier 1 and Tier 2 licenses.

The currency operators were previously charged N35m for a general license.

This was contained in the draft paper of a “Revised Regulatory And Supervisory Guidelines For Bureau De Change Operations In Nigeria” published by the apex bank on Friday.

The new guidelines contain several new changes to the guidelines for BDC operations in the country and if endorsed will be effective at a date decided by the CBN.

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Recently, operations of the currency operators have suffered heavy backlash following the free fall of the naira against the dollar.

Government officials have severely blamed the black market operators for this fall though liquidity remains a huge challenge.

This week, operatives of the Economic and Financial Crimes Commision arrested over 250 BDC operators in Abuja and many more in other states of the federation.

Under the minimum capital requirements, the central bank is introducing a two-tier license for BDC operators in the country.

A Tier 1 BDC is authorised to operate on a national basis can open branches and may appoint franchisees, subject to the approval of the CBN.

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A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform, and rendition requirements.

Also, a Tier 2 BDC is authorised to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees.”

Under Tier 1 operators are expected to have N2bn as minimum share capital while also depositing a Mandatory Caution Deposit of N200m.

The application and license fee is also N1 million and N5 million respectively.

“Under Tier 2 operators are expected to have N500 million as minimum share capital while depositing a Mandatory Caution Deposit of N50 million. The application and license fee are also N250,000 and N2 million respectively.”

The apex bank also stated that the prescribed minimum capital of BDCs and any subsequent capital injection shall be subject to verification by the CBN.

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MPC Nominees Promise To End Forex, Food Crises

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The Senate on Wednesday grilled nominees for membership of the Central Bank of Nigeria’s Monetary Policy Committee over the forex crisis and unending food crisis.

President Bola Tinubu had, last week, forwarded to the Senate for confirmation, the names of nominees for the committee of the CBN.

In giving the request expeditious consideration ahead of the MPC meeting slated for next Monday, February 26, the Senate, through its Committee on Banking, Insurance, and Other Financial Institutions, grilled six out of the nominees with questions on required urgent solutions to forex volatility and food crisis.

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The first to be grilled was the Director-General of the Securities and Exchange Commission, Lamido Yuguda, who informed the committee that his nomination into MPC would give the SEC the needed voice in monetary policy.

Yuguda lamented that the value of the Naira as it is today, is not real, having lost its intrinsic value but that the MPC, when inaugurated on Monday, would join other stakeholders to stabilise the national currency.

He said, “The value of any currency is measured by the goods and services that it can buy. The Naira, as it is today, does not possess that value sufficiently which is being critically looked into.”

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In his submission, the nominee from Lagos State, Dr. Mustapha Akinkunmi, said the way out now is to target the exchange rate and not inflation as currently being tackled which hasn’t yielded so much result.

He saod, “A more proactive way of addressing the Naira volatility problem at hand is for the CBN to target the exchange rate itself and not inflation.

“The inflation the country is facing now is largely that of food inflation, which is beyond CBN but for the entire country.

“Production and distribution of food commodities across the country would help to reduce the food inflation, while the aggressive target of the exchange rate, would help to stabilise the Naira with the required increase in productivity.”

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In a similar submission, the nominee from Imo State, Mrs Aku Odinkemelu, said productivity is the key to arresting the volatility of the Naira and food inflation.

Other nominees grilled at the session by the committee were Prof. Murtala Sagagi, Kano State; Bamidele Amoo, Kwara State; and Aloysius Ordu, who worked with the World Bank and the African Development Bank for 30 years at different times.

In his closing remarks, the committee’s chairman, Senator Tokunbo Abiru (APC, Lagos East), told the nominees that their screening was done ahead of the MPC meeting slated for next Monday by the CBN.

Abiru said what Nigerians expect to come after the meeting are solutions to the rising inflation rate, worsening Naira volatility in the forex market and the general rejuvenation of the economy.

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MTN, Dangote Cement, Others Drag Equity Market To N1.8tn Loss

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The equity market opened in the reds on Monday as investors lost about N1.82tn.

Substantial depreciations were observed in bellwether stocks, fuelled by strong sell interest in the market. Specifically, securities such as Dangote Cement, MTN Nigeria, NGX Group, NEM Insurance, and Tantalizer dipped by 10 percent, 10 percent, -9.76 percent, -9.74 percent, and -9.52 percent, respectively.

Both the All-Share Index and the market capitalisation of the local bourse depreciated by 3.15 percent to close at 102,393.23 points and N56.03tn due to waning market sentiment. Hence, the year-to-date return of the index dipped to 36.94 percent from 41.39 percent in the previous trading session.

Trading activities remained subdued into the new week with notable decreases in the total traded volume and value by 17.60 percent and 5.59 percent to 273.85 million units and N7.44bn, respectively. However, the total deals for the day bucked the trend, advancing by 17.60 percent to 9,688 trades.

In eight months of Tinubu administration, Nigeria’s stock market leads the world
Despite the market sentiments, buy pressure was observed in Juli Plc, Daar Communications, Sunu Assurances, ABC Transport, and NAHCO, as their share prices rose by 9.52 percent, 8.64 percent, 6.74 percent, 6.67 percent, and 5.86 percent.

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On the sectoral front, tracked sub-sector indices closed in red territory. The Industrial Goods sector topped the chart for the most losers with a massive 6.02 percent decline, primarily driven by sell-pressure in Dangote Cement. This was followed by the Insurance sector with a loss of 2.49 percent, attributable majorly, to share price declines in NEM Insurance, Linkage Assurance, and VeritasKap.

Sectors such as Banking, Consumer Goods, and Oil/Gas declined by 0.24 percent, 0.77 percent, and 0.28 percent, respectively.

Guaranty Trust Holding Company Plc was the most traded security by volume with 28.85 million units, while Geregu led in value at N1.74bn.

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